3rd Edition

ISBN: 9780136912644

Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella

Publisher: Pearson Education (US)

Concept explainers

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

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Textbook Question

Chapter 5, Problem 5.3MC

Beach and Poole, CPA is reviewing income statement presentation with some interns that are working with the firm during the summer break. The interns were asked to list three things that were true about the multiple-step income statement. Choose the item below that is a true statement.

a. The multiple-step income statement lists gains and losses as part of income from normal operations
b. The multiple-step income statement snows income or loss from operations after the gross margin and operating expenses lines but before other revenues and gains.
c. Freight out is classified as part of the inventory cost and moved to cost of goods sold when the item is purchased by a third party.
d. Gain/loss on the sale of equipment held tor disposal from discontinued operations is included in the continuing operations section of the income statement.

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Chapter 5, Problem 5.2MC

Chapter 5, Problem 5.4MC

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Solution Summary: The author explains that the correct option is the multi-step income statement, which distinguishes the operating revenues and expenses from the non-operating revenues, expenses, gains, and losses.

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